THE BATTALION
THURSDAY, APRIL 2, 1981
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Staff photo by Chuck Chapman
Cheaper than gas
George Rowe demonstrates how he com
bats the rising price of gasoline and the size
of Texas A&M University in front of the
Memorial Student Center Wednesday.
Rowe says that his dog, Jessica, probably
costs more to (ill up and maintain than his
Congress must act to save\
Social Security from ruin
United Press International
WASHINGTON — Social Security, the Depress
ion-era retirement innovation that has grown into
(lielargest federal program, faces bankruptcy unless
Congress makes some difficult decisions it would
rather avoid.
The choice for lawmakers in this time of tight
budgets is not pleasant — reduce benefits, limit
recipients, raise taxes or, quite possibly, some com
bination of the three.
What began in 1935 as the government’s first
venture into social welfare — modeled after Ger
many’s now century-old system — has because of
inflation and bureaucratic growth become the largest
single item in the federal budget.
The problem is that more money is flowing out of
the Social Security system than is coming in. For
every $10 paid out in benefits, it collects only $9.50
, hut |n taxes.
The job facing Congress is to balance the Social
Security books. And it must decide whether to re
verse the trend in recent years of placing more and
more welfare programs under the Social Security
isf|Administration.
No longer is it solely a program, as conceived by
the New Deal, to help old folks retire with dignity.
Jkiw, beneficiaries include spouses, children and
disabled persons.
More than 36 million Americans will collect $136
billion from Social Security this year. The maximum
Monthly benefit for a worker retiring at age 65 in
was $553.30. The average check paid such
workers was $283.
Lawmakers almost certainly cannot eliminate the
Social Security deficit without making some people
mhappy.
So, Congress seems ready to approve whatever
npopular measures it must to ensure that Social
Security does not run out of money — a calamity
ixperts foresee occurring by 1983 unless something
done to prevent it. They also agree the system
laces even more serious financing problems next
icntury.
Two factors make a solution to the Social Security
risiseven more difficult: the troubled economy and
he declining birth rate. Both mean reduced re-
enues with which to pay the benefits.
Secretary Richard Schweiker of the Department
)f Health and Human Services, which has jurisdic-
ion over the Social Security Administration, fore
sts a time of “hard choices, some unpopular deci-
iions and some difficult trade-offs.”
There are no easy answers, ” says Schweiker. The
Inal solution, he says, will have to be “tough medi
ate.
The list of distasteful considerations ranges from
educing benefits to using general tax revenues to
nake up the deficit, and in between there is the
visibility of extending the retirement age.
“We’ve been wrapping up the Social Security sys-
em in bailing wire for years,” said Rep. Barber
enable, D-N.Y., a member of the House Ways and
deans Committee that must propose legislation to
benefits flowing. “This problem threatens to
iltimately result in generational warfare between
he young and the old.”
It will almost certainly generate political warfare.
Democrats have championed benefit increases. Re
publicans generally have provided what opposition
here was.
Democrats, although outnumbered in the Senate,
ontrol the House, where all tax legislation must
riginate.
Changes coming will be made by my subcommit-
e e, insists Rep. J. J. Pickle, D-Texas, chairman of
Social Security subcommittee that will actually
’fite the bill.
“This bill is not going to be written at the White
House. It is not going to written by (Budget Dire
ctor) Dave Stockman or Richard Schweiker.”
Pickle’s counterpart in the Senate is Bill Arm
strong, a conservative Colorado Republican with
close ties to the White House and Schweiker.
“Either we find a way to reduce the cost of the
program or increase the tax burden or someone is
going to pull a rabbit out of the hat, ” says Armstrong.
The long-range solution will involve reducing the
number of people getting benefits. That will prob
ably mean raising the retirement age, either through
a change in the law or incentives to persuade people
to work longer.
There are also two thorny political questions: How
lawmakers can require participation by the public,
but not federal workers? What about the status of
women?
All agree women are discriminated against by the
present law, but it would cost money to remedy this
at a time when the emphasis is on cutting spending.
Since its inception during Franklin Roosevelt’s
New Deal, the retirement and survivors program has
been supported by payroll taxes, called “FICA” on
paycheck stubs.
The tax is the most regressive of federal levies
because the rate does not increase as a person earns
more money. Workers don’t finance their own re
tirements, but support current beneficiaries on the
assumption that following generations will pay the
freight when today’s workers are ready to retire.
As the government expanded and went head-long
into social welfare, several programs were added to
Social Security to be financed by the payroll tax.
They include benefits for students age 18-22
whose parents are dead or disabled, disability pay
ments for workers, and Medicare, the government
health insurance program for the elderly.
“Since the enactment of Social Security a number
of unearned benefits have been added to the core
old-age and survivors insurance program,” Reagan
said in his budget message.” These “add-ons” have
threatened the solvency of the program, he said, and
it is time to revert to the basic retirement role Social
Security was meant to play.
In 1937, when the program began operating two
years after the Social Security Act was passed, work
ers paid a maximum of $30 a year in payroll taxes. By
1950 that had risen to $45. It was $174 in 1965 and
$374 in 1970. This year the limit is $1,975 and there
are scheduled increases until 1986.
The huge jump is partly because of the add-on
programs, like Medicare and benefits for full-time
students, but it is mostly due to the 1972 passage of
legislation adjusting all Social Security benefits for
inflation.
The rocky economy of the 1970s and the declining
birth rate of recent years have taken their toll so that
each retiree collecting benefits is supported by 3.2
workers, compared to 1945 when 50 workers sup
ported one retiree. Projections are by 2035 the ratio
will shrink to 2-tol.
“Most of the short-term problems facing Social
Security are caused not by the system, but by the
economy,” says Pickle.
All sides agree the long-range problem is more
serious because it is going to require changes that
will alter American lifestyles — probably either de
layed retirement or limits on cost-of-living increases.
Even Pickle, a folksy fellow from Austin, Texas,
who prefaces virtually everything with an assurance
the system won’t go broke, warns it would be “a fatal
mistake if we assume the problems facing Social
Security can be handled by stonewalling against
change.”
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